9.5 Lesson 5: Time to File

Last updated about 2 hours ago

3 Nsɛmmisa

Hyɛ no nsow a efi ɔkyerɛwfo no hɔ:

Learning Objectives

Students will be able to:

Complete a 1040 form to file their taxes

National Standards for Personal Financial Education

Earning Income

6a: Calculate the amount of taxes a person is likely to pay when given information or data about the person’s sources of income and amount of spending

Akwankyerɛ

Learning Objectives

Students will be able to:

Complete a 1040 form to file their taxes

National Standards for Personal Financial Education

Earning Income

6a: Calculate the amount of taxes a person is likely to pay when given information or data about the person’s sources of income and amount of spending

Intro

RECAP: If a single person taking the standard deduction makes $40,000, how much will they pay in federal income taxes?

Do It

Part I: Example Scenario

Laabri

9.5 Lesson 5: Time to File

Last updated about 2 hours ago

3 Nsɛmmisa

Hyɛ no nsow a efi ɔkyerɛwfo no hɔ:

Learning Objectives

Students will be able to:

Complete a 1040 form to file their taxes

National Standards for Personal Financial Education

Earning Income

6a: Calculate the amount of taxes a person is likely to pay when given information or data about the person’s sources of income and amount of spending

Akwankyerɛ

Learning Objectives

Students will be able to:

Complete a 1040 form to file their taxes

National Standards for Personal Financial Education

Earning Income

6a: Calculate the amount of taxes a person is likely to pay when given information or data about the person’s sources of income and amount of spending

Intro

RECAP: If a single person taking the standard deduction makes $40,000, how much will they pay in federal income taxes?

Do It

Part I: Example Scenario

Part II: Scenarios

Each of the three people below have a different tax filing situation. Fill out their 1040 by:

opening up their W-2 form
following the directions on every line of the 1040 to fill it out. You can type directly into the form or print it and complete it manually. For certain lines, you may need to consult the 1040 Additional Instructions table below.

Marcus Roberts

W-2

Lucy Chen

W-2

Edgar Flores

W-2

Age: 23
Recent college graduate, living by himself
Employment: Full-time sales representative; salaried

Age: 24
Completed her first full year of working a full-time job, living by herself
Employment: Full-time marketing associate, salaried

Age: 16
Lives with his parents
Employment: Works 10 hrs/wk cleaning pools for $15/hour

1040 Additional Instructions
Digital Assets	No
Lines 1b-1i, 2a-6b, 7a, 8	Assume $0 for each value
Line 10	No adjustments to income
Line 12	Determine if the individual is/is not a dependent. Review the IRS’ Dependents page if you need to. Then, follow the directions: If you are NOT a dependent, enter $15,750 If you ARE a dependent, and line 1a is >$15,750, enter $15,750 If you ARE a dependent, and line 1a is <$15,750, add $450 to the value on line 1a and enter that total on line 12 Note: Dependents who earn less than the minimum income requirement to file complete the Standard Deduction worksheet on page 34 of the 1040 instructions. This is where the $450 comes from.
Line 13a,b	Assume no Qualified Business Income Deduction or additional deductions
Line 16	To find tax for line 16, refer to the tax table starting on page 68 of the 1040 Instructions In these scenarios, no one needs to complete additional forms
Lines 17, 19, 20, 23	Assume $0 for each value
Line 25b-c	Assume no 1099 form or other forms
Line 26	Assume no estimated tax payments or amounts applied
Lines 27-32	No one in our scenarios is eligible for these credits; Assume $0 for all
Line 35a	If line 34 indicates they overpaid, complete line 35a that they’d like a full refund. You should NOT enter bank account information.
Line 36	Assume you don’t want any of your refund to go toward next year’s taxes
Line 38	Directly from the IRS instructions, if you owe money, figuring out the penalty yourself is complicated; you can leave line 38 blank and the IRS will simply send you a bill for the penalty. For this exercise, you can leave line 38 blank.

Part III: Results

Enter the results of each person’s 1040. Are they going to receive a refund or owe taxes? How much?

Draggable item		Corresponding Item
Owes: $128		Marcus
Refund: $336		Lucy
Refund: $3,869		Edgar

Part IV: Audit a classmate

Sometimes, the IRS conducts audits, or reviews, of an organization's or individual's accounts and financial information to ensure information is being reported correctly. While only about 1% of people get audited, it’s a very serious thing so you want to make sure you complete your taxes honestly and accurately.

additional info: Top 5 Myths About Tax Audits - TurboTax Tax Tips & Videos

Audit a classmate’s 1040 and note any potential errors. You will review them with the person who filed that form. (List potential errors and explain why you believe it might be an error)

Part II: Scenarios

Each of the three people below have a different tax filing situation. Fill out their 1040 by:

opening up their W-2 form
following the directions on every line of the 1040 to fill it out. You can type directly into the form or print it and complete it manually. For certain lines, you may need to consult the 1040 Additional Instructions table below.

Marcus Roberts

W-2

Lucy Chen

W-2

Edgar Flores

W-2

Age: 23
Recent college graduate, living by himself
Employment: Full-time sales representative; salaried

Age: 24
Completed her first full year of working a full-time job, living by herself
Employment: Full-time marketing associate, salaried

Age: 16
Lives with his parents
Employment: Works 10 hrs/wk cleaning pools for $15/hour

1040 Additional Instructions
Digital Assets	No
Lines 1b-1i, 2a-6b, 7a, 8	Assume $0 for each value
Line 10	No adjustments to income
Line 12	Determine if the individual is/is not a dependent. Review the IRS’ Dependents page if you need to. Then, follow the directions: If you are NOT a dependent, enter $15,750 If you ARE a dependent, and line 1a is >$15,750, enter $15,750 If you ARE a dependent, and line 1a is <$15,750, add $450 to the value on line 1a and enter that total on line 12 Note: Dependents who earn less than the minimum income requirement to file complete the Standard Deduction worksheet on page 34 of the 1040 instructions. This is where the $450 comes from.
Line 13a,b	Assume no Qualified Business Income Deduction or additional deductions
Line 16	To find tax for line 16, refer to the tax table starting on page 68 of the 1040 Instructions In these scenarios, no one needs to complete additional forms
Lines 17, 19, 20, 23	Assume $0 for each value
Line 25b-c	Assume no 1099 form or other forms
Line 26	Assume no estimated tax payments or amounts applied
Lines 27-32	No one in our scenarios is eligible for these credits; Assume $0 for all
Line 35a	If line 34 indicates they overpaid, complete line 35a that they’d like a full refund. You should NOT enter bank account information.
Line 36	Assume you don’t want any of your refund to go toward next year’s taxes
Line 38	Directly from the IRS instructions, if you owe money, figuring out the penalty yourself is complicated; you can leave line 38 blank and the IRS will simply send you a bill for the penalty. For this exercise, you can leave line 38 blank.